Ameriprise 2014 Annual Report Download - page 41

our RiverSource Life companies and Property Casualty companies are regulated by each of the insurance regulators in the
states where each is authorized to transact business. Financial regulation of our RiverSource Life companies and Property
Casualty companies is extensive, and their financial transactions (such as intercompany dividends and investment activity)
are often subject to pre-notification and continuing evaluation by the Domiciliary Regulators.
Virtually all states require participation in insurance guaranty associations, which assess fees to insurance companies in
order to fund claims of policyholders and contractholders of insolvent insurance companies subject to statutory limits.
These assessments are generally based on a member insurer’s proportionate share of all premiums written by member
insurers in the state during a specified period prior to an insurer’s insolvency. See Note 23 to our Consolidated Financial
Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information regarding guaranty
association assessments.
Certain variable annuity and variable life insurance policies offered by the RiverSource Life companies constitute and are
registered as securities under the Securities Act of 1933, as amended. As such, these products are subject to regulation
by the SEC and FINRA. Securities regulators have recently increased their focus on the adequacy of disclosure regarding
complex investment products, including variable annuities and life insurance, and have announced that they will continue
to review actions by life insurers to improve profitability and reduce risks under in force annuity and insurance products
with guaranteed benefits. In reviewing such actions, regulators examine, among other factors, potential conflicts between
an insurer’s financial interests and the interests of the contract owners, as well as perceived inconsistencies between an
insurer’s actions and the expectations of investors at the time a product was sold.
The Dodd-Frank Act created the Federal Insurance Office (‘‘FIO’’) within the Department of Treasury. The FIO does not have
substantive regulatory responsibilities, though it is tasked with monitoring the insurance industry and the effectiveness of
its regulatory framework and providing periodic reports to the President and Congress. We monitor the FIO’s activity to
identify and assess emerging regulatory priorities with potential application to our business.
In October 2012, RiverSource Life purchased a block of residential mortgage loans from Ameriprise Bank, FSB. As an
owner and servicer of residential mortgages, RiverSource Life must comply with applicable federal and state lending and
foreclosure laws and is subject to the jurisdiction of the federal Consumer Finance Protection Bureau and certain state
regulators relative to these mortgage loans.
Each of our insurance subsidiaries is subject to risk-based capital (‘‘RBC’’) requirements designed to assess the adequacy
of an insurance company’s total adjusted capital in relation to its investment, insurance and other risks. The National
Association of Insurance Commissioners (‘‘NAIC’’) has established RBC standards that all state insurance departments
have adopted. The RBC requirements are used by the NAIC and state insurance regulators to identify companies that merit
regulatory actions designed to protect policyholders. Our RiverSource Life companies and Property Casualty companies are
subject to various levels of regulatory intervention should their total adjusted statutory capital fall below defined RBC action
levels. At the ‘‘company action level,’’ defined as total adjusted capital level between 100% and 75% of the RBC
requirement, an insurer must submit a plan for corrective action with its primary state regulator. The ‘‘regulatory action
level,’’ which is between 75% and 50% of the RBC requirement, subjects an insurer to examination, analysis and specific
corrective action prescribed by the primary state regulator. If a company’s total adjusted capital falls between 50% and
35% of its RBC requirement, referred to as ‘‘authorized control level,’’ the insurer’s primary state regulator may place the
insurer under regulatory control. Insurers with total adjusted capital below 35% of the requirement will be placed under
regulatory control.
RiverSource Life, RiverSource Life of NY, IDS Property Casualty and Ameriprise Insurance Company maintain capital levels
well in excess of the company action level required by state insurance regulators. For RiverSource Life, the company action
level RBC was $595 million as of December 31, 2014, and the corresponding total adjusted capital was $3.6 billion,
which represents 607% of company action level RBC. For RiverSource Life of NY, the company action level RBC was
$59 million as of December 31, 2014, and the corresponding total adjusted capital was $312 million, which represents
533% of company action level RBC. As of December 31, 2014, the company action level RBC was $98 million for IDS
Property Casualty and $447,594 for Ameriprise Insurance Company. As of December 31, 2014, IDS Property Casualty had
$560 million of total adjusted capital, or 572% of the company action level RBC, and Ameriprise Insurance Company had
$45 million of total adjusted capital, or 10,084% of the company action level RBC.
Ameriprise Financial, as a direct and indirect owner of its insurance subsidiaries, is subject to the insurance holding
companies laws of the states where its insurance subsidiaries are domiciled. These laws generally require insurance
holding companies to register with the insurance department of the insurance company’s state of domicile and to provide
certain financial and other information about the operations of the companies within the holding company structure. In
addition, transactions between an insurance company and other companies within the same holding company structure
must be on terms that are considered to be fair and reasonable.
As part of its Solvency Modernization Initiative, in 2010 the NAIC adopted revisions to its Insurance Holding Company
System Regulatory Act (‘‘Holding Company Act’’) to enhance insurer group supervision and create a new Risk Management
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